Chang v. Chen

80 F.3d 1293 (1996) United States Court of Appeals for the Ninth Circuit 1996-04-04

civil; second amended complaint dismissed under 12(b)(6) without leave to amend for failure to allege an enterprise; plaintiffs appeal; affirmed (result: claimant-lost)

Facts

  1. 2 Enterprise (§ 1961(4)): legal entity or association-in-fact not pleaded
    We hold that a RICO enterprise must have an ascertainable structure separate and apart from the structure inherent in the conduct of the pattern of racketeering activity.
  2. 2 Enterprise (§ 1961(4)): legal entity or association-in-fact not pleaded
    According to the second amended complaint, Appellee Eddie Lin, Appellee Eugene Gabryeh, Appellee Marian Gabryeh and George Realty formed a RICO enterprise by associating in fact to conduct the above described fraudulent real estate transactions.
  3. 2 Enterprise (§ 1961(4)): legal entity or association-in-fact not pleaded
    Each Appellee allegedly was in charge of and played a vitally important role in controlling and managing a specific phase of the enterprise’s activities.
  4. 2 Enterprise (§ 1961(4)): legal entity or association-in-fact not pleaded
    The structure should provide “some mechanism for controlling and directing the affairs of the group on an ongoing, rather than an ad hoe, basis.”
  5. 2 Enterprise (§ 1961(4)): legal entity or association-in-fact not pleaded
    Rather, it is sufficient to show that the organization has an existence beyond that which is merely necessary to commit the predicate acts of racketeering.
  6. 2 Enterprise (§ 1961(4)): legal entity or association-in-fact not pleaded
    Appellants have not alleged a structure to the organization beyond that which was inherent in the alleged acts of racketeering-activity.
  7. 2 Enterprise (§ 1961(4)): legal entity or association-in-fact not pleaded
    Each Appellee conducted his or her role in the alleged fraudulent real estate transactions autonomously.
  8. 2 Enterprise (§ 1961(4)): legal entity or association-in-fact not pleaded
    This lone statement that the Gabryches directed Lin’s actions is insufficient to establish that there was an enterprise separate and apart from the predicate acts.
  9. 2 Enterprise (§ 1961(4)): legal entity or association-in-fact not pleaded
    The proceeds were allocated to Appellees in a manner consistent with ordinary real estate transactions.
  10. 2 Enterprise (§ 1961(4)): legal entity or association-in-fact not pleaded
    It is true that the involvement of a corporation, which has an existence separate from its participation in the racketeering activity, can satisfy the enterprise element’s requirement of a separate structure.
  11. 2 Enterprise (§ 1961(4)): legal entity or association-in-fact not pleaded
    The second amended complaint alleged that George Realty was part of the enterprise, but did not name George Realty as a defendant and did not explain George Realty’s relationship to or participation in the alleged enterprise, except to note that Eddie Lin was the real estate agent representing George Realty.
  12. 2 Enterprise (§ 1961(4)): legal entity or association-in-fact not pleaded
    Although George Realty had a legal existence separate from the racketeering activity, Appellants did not allege that it participated in the racketeering activity.
  13. 2 Enterprise (§ 1961(4)): legal entity or association-in-fact not pleaded
    Thus, the mention of George Realty in the description of the alleged enterprise fails to satisfy the separate structure requirement.
  14. 11 Conspiracy to violate § 1962(a), (b), or (c) (§ 1962(d)) not pleaded
    Without a proper allegation of an enterprise, neither the § 1962(c) nor the § 1962(d) claims can survive Appellees’ motion to dismiss.